DETROIT -- General Motors is considering alternatives for its finance arm, General Motors Acceptance Corp., because funding constraints are impeding its ability to support the automaker's sales, GMAC said on Wednesday.
"To the extent access to unsecured funding remains diminished, it will be very challenging for GMAC to continue providing a full range of competitive automotive finance support to GM," General Motors Acceptance Corp. said in a statement.
"As a result, General Motors is now exploring strategic alternatives with respect to GMAC."
The statement was issued ahead of a conference call hosted by GMAC Chairman Eric Feldstein.
Pointing to one such alternative, GMAC said on Tuesday that it will sell up to $55 billion in car loans to Bank of America over the next five years. The deal will secure near-term funding for GMAC and help it finance sales of GM vehicles.
The finance division, which has been key in limiting the severity of this year's financial crisis at GM, has seen its borrowing costs increase sharply after its debt was downgraded to high-yield, or "junk," status earlier this year.
GMAC also said it was close to finalizing a previously announced deal to sell off a majority stake in its commercial mortgage unit to a group of private investors.
GMAC added that it was on track to exceed its full-year earnings target of $2.5 billion despite lower expected profits from its financing operations.
Improved earnings from GMAC's mortgage and insurance operations will offset weaker profits from financing, which have been hurt by lower net interest margins, GMAC said.